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Hips, Knees and RFID: Inside Orthopedics - A Reverse Supply Chain Like No Other
by David C. Wyld
Reverse Logistics Magazine, Edition 15
What if you knew that every order you shipped would be returned? What if you knew that for every item actually used by your customer, you would have to ship thirty, forty, fifty…a hundred or more “spares?” What if you knew that all of these leftover items would be returned to you on a daily basis, and usually, not nearly in as organized a box as the neatly packed one which left your distribution center days before? What if you faced packing, shipping, and receiving thousands of such orders on a weekly basis? What if this was your business model and your supply chain – and one that literally had life or death consequences? Welcome to the unique world of the orthopedic implant industry -- a business that is growing by leaps and bounds today.
The Booming Joint Industry
With the aging of the Baby Boomer population and the push for the “active senior” lifestyle, accompanied by refinements in orthopedic surgery techniques, including computer-assisted surgery, we have seen dramatically rising rates of hip and knee joint replac
ements over the past decade. In the U.S., data from the National Center for Health Statistics show that there has been a dramatic rise in the number of both hip and knee replacement operations over the most recent seven year period for which data is available (1997-2004) (see Tables 1 & 2).
Table 1 – Annual Hip Replacements in the United States, 1997 and 2004
Table 2 – Annual Knee Replacements in the United States, 1997 and 2004
this is not just an American phenomenon; in Canada, according to the most recent data available from the Canadian Joint Replacement Registry (CJRR), there has also been a phenomenal increase in the number of hip and knee replacements in recent years (see Figure 1). Similarly, significant utilization increases have been noted both across Europe and Asia.
Beyond age, three other factors have also helped accelerate the trends toward joint replacement. The growing obesity problem has caused more people to seek out leg joint replacement earlier and earlier in life, as heavier body masses place more stress and cause more wear on hips and knees. Also, the growing concerns over long-term effects of taking pain medications and Cox-2 inhibitors have led more patients –and their doctors – to turn earlier to non-pharmacologic options for long-term pain relief, even before such conditions turn chronic, especially as success rates for such procedures improve. Finally, one can not discount the impact of the ever-increasing amount of direct-to-consumer focused advertising for such procedures, as joint implant manufacturers seek to promote healthier lifestyles (exemplified by golf champion Jack Nicklaus promoting Stryker hip implants after he himself underwent a replacement procedure.) As Dr. Paul Lachiewicz, MD, a Professor of Orthopedics at the University of North Carolina put it bluntly, in today’s environment: “People don’t want to take medications. They want it fixed.”
Figure 1- Total Number of Hip and Knee Replacements in Canada, 1995 and 2005
According to a just-published analysis in Arthritis Care & Research, if these trends continue, there will be an estimated 600,000 hip replacements and 1.4 million knee replacements carried out annually by 2015 in the U.S. alone. Also, as more patients undergo joint replacement operations at younger ages, it becomes increasingly likely that they will face the prospect of having to undergo a revision operation down the line (a replacement of their initial joint replacement), as they simply outlive the life of their artificial joint. Such revisions have proven to be lengthier, more difficult, and more costly operations, posing more risk for both the patient and the surgeon, and they will serve to cause even more growth in the number of operations – and the number of implants needed – in coming years. All of this points to vast growth in the orthopedic industry. According to industry research, the global market for both knee and hip replacement orthopedic implants each individually exceeded $5 billion dollars in 2007.
Orthopedic Surgery 101
When we laymen think of surgery to replace something, we commonly think of it as basically being like a highly advanced, highly dangerous version of the auto repair shop. We look upon the process as “body work” – a not-so-simple matter of replacing an “old” or “damaged” part with an artificial (new) or slightly used (transplanted) part – heart for a heart, kidney for a kidney, eye for an eye, literally. However, just as with the auto repair analogy, it is not so simple when it comes to the “joints.” Much like a strut, a shock absorber, or a CV joint for an automobile is uniquely suited to the make, model, and year of the car, so too are our human joints, as one hip or knee joint does not fit all.
In fact, just like you would need to find a muffler or any other replacement part to fit your particular car, so is the case with replacement human joints.
The Orthopedic Supply Chain
Supplying artificial joint replacements is thus perhaps the world’s most unique supply chains. Some larger hospitals stock an entire assortment of orthopedic implants and supplies, consigned to them by the manufacturer and billed upon use. However, in most cases, we see perhaps the ultimate example of a “just in time” inventory system. This is because when a patient’s hip or knee replacement operation is scheduled, an orthopedic kit, sometimes called a “set,” is ordered from one of over 370 firms globally that supply this specialized field. In fact, for a single joint replacement operation, the orthopedic surgeon will need an entire joint replacement kit, which may have 20-150 sterile implants and associated components. However, until the operation is well underway, the surgeon will not know the particular size implant needed to complete the joint replacement. Thus, he or she will choose an implant and perhaps 1-2 associated items for use in the replacement operation, with the rest of the assortment being returnable to the orthopedic supplier. It is thus absolutely critical that the surgeon have the right size and type implant in-hand and available during the procedure. As Michael Schaffler, Operations Director for Zimmer, a leading orthopedic implant supplier, plainly described the situation: “In this business, a picking error discovered in the operating theater when that patient is on the table is not an option.”
So, for the medical supplier, picking, packing, shipping, and accounting for these valuable items is an area where 100% accuracy is absolutely critical. After being shipped back to the firm, the incoming kits are then scanned to see which items have actually been used. These are noted both for billing and for replacing the missing parts from the kits, so that the kits can be restocked with replacements for the implants used and then sent out once again for future operations.
The RFID Solution For Implants
For most orthopedic implant manufacturers, bar coding had been the principal means of identifying each of the carefully packaged implants in an orthopedic kit. The shift to RFID tagging of the individual items and the cartons containing them in early implementations has produced process improvements that are remarkable by any measure. Implementations so far have dealt with the entire cycle – from ensuring picking accuracy in assembling the kits for shipment to scanning inbound kits to determine which implants and other items had actually been used in surgery. An example of such is DePuy Orthopaedics, a Warsaw, Indiana-based subsidiary of Johnson & Johnson. DePuy has installed an RFID-based inventory control system, using technology supplied by ODIN Technologies. Each day, on average, DePuy ships almost 700 orthopedic kits, and it receives an almost equal number back in return. Dave Johnson, DePuy’s Director of Distribution, recently commented that: “It used to take us 10 to 30 minutes to inspect each set, and now we accomplish it in less than a minute…(and) the accuracy of the RFID process so far has been amazing.” Zimmer, another leading orthopedic supplier, also based in Warsaw, Indiana, has implemented a similar solution from Magellan Technology. And with the global market for orthopedic implants, the shift to RFID tracking is going global as well. Recently, the Spanish medical products distributor, MBA Grupo, announced that it was shifting to RFID tagging for its orthopedic supply operations, making use of tags from UPM Raflatac and Intermec readers.
Some of the technical challenges for reading accuracy in this particular application include the facts that:
- A significant percentage of joint replacement components have titanium and/or cobalt, causing a good bit of radio wave interference;
- A single orthopedic kit may actually be a shipment of several boxes. Thus, in searching through the kits for the “right” implant, a surgeon and/or other operating room personnel may actually shift items from their original package to another box, negating the item-to-box packing slip; and
- Likewise, returned orthopedic kits are often times not packed as carefully as are the outgoing packages. Thus, readers are challenged to cope with tags that are in multiple orientations, making reading all the more difficult.
What is the ROI equation for tagging of orthopedic implants? Unlike many other in-hospital applications for RFID (tagging supplies, medical equipment, etc.), this is a supplier-driven and funded program. Supplier reports show that because of the reduced cycle times for both picking and assembling outbound shipments and handling scans of inbound returned kits – and the attendant labor cost savings through the more automated process – ROI on such implementations can be measured in months, not years. Furthermore, the assurance of accuracy in the shipments can not be understated – both to the orthopedic supplier and to the orthopedic operation itself. The principal benefit to the hospital is, of course, assuring the right implant is available for the patient’s surgery, thereby promoting positive health outcomes for the patient and for the hospital’s quality ratings. However, the hospital also benefits from the reduced need for inspecting the orthopedic kits and less handling, reducing labor costs.
Finally, another push for RFID tracking of orthopedic implants may come from the specter of a government mandate for tracking of medical devices and implants. For the past two years, the U.S. Food and Drug Administration (FDA) has been investigating the potential for a unique device identification (UDI) system for use in the health care industry, gathering input from medical device manufacturers, doctors, health care executives and even patients. The desire is to create an automated, standardized way to capture information on individual medical devices and supplies to enable better tracking and recall capabilities. The FDA believes the UDI should, at a minimum, provide for automatic collection of the following information on all medical devices:
- manufacturer
- serial number
- make and model
- identifying lot and manufacturing numbers
- unique attributes
- expiration dates
In April 2008, the FDA’s Center for Devices and Radiological Health (CDRH) announced that it intended to issue draft specifications for a nationwide UDI system by the end of the year.
Certainly, with the demonstrated value of RFID solutions, combined with the growing orthopedic joint replacement marketplace, this will be an active area for development in the years to come. Lessons learned and best practices established here may indeed help set standards for other health care industry applications of RFID technology. And, if we can make Mom’s hip replacement surgery go off without a hitch, all the better!
